From 1st July 2021, there will be two new EU VAT accounting schemes that will be introduced however, between 1st January 2021 and 1st July 2021, an alternative route will need to be taken when selling goods to private consumers in the EU now that distance selling thresholds are no longer available.
Between January and the end of June 2021, goods sold to private customers in the EU by a UK company will be zero-rated exports however, import VAT will be due on arrival in the EU country where the customer is located. The options available on how to deal with this are outlined below.
Firstly, you could arrange for your freight forwarder/express courier to manage the importation of goods into the EU and then pay the import VAT on the customers behalf. You would then reimburse the courier for the import VAT. You will need to apply for an EORI number and provide this to the courier.
The next option is to let the customer pay for the import VAT and any possible customs duty when the goods are delivered, but this can delay the delivery and cause extra costs to the customer. If this option is chosen then you should contact your current distributor about how to correctly display your EORI number so that the goods can be exported.
Finally, you could register for VAT in country that the customer is located and then charge domestic VAT to the customer. You would then pay the import VAT and then be able to recover it depending on the rules in each country. This may be suitable if only selling to one country but may become more complex if selling to multiple EU countries.
From 1st July 2021, the EU is to introduce two methods which will allow businesses to account for the import VAT without the need for multiple EU VAT registrations.
One stop shop (OSS) - The OSS return will allow you to file a single quarterly return declaring and paying output VAT at the appropriate rates on your sales to customers in all EU countries. The OSS return cannot be used for UK businesses who have stock in the EU or use the Fulfilment by Amazon (FBA) programme.
Import one stop shop (IOSS) - UK businesses selling goods to private customers with a value of less than €150 can register for IOSS in just one EU country. You will be given an IOSS identification number which should be listed on all goods sent to the EU. This number will allow Customs to see that VAT is being properly declared. The IOSS return will require a quarterly return submitted to a tax authority in the EU country that you are registered in.